Bitcoin seemed locked in a market that had been sliding downward for months. Then, almost out of nowhere, it surged to $80,000, posting its best weekly gain in years and reviving memes, "HODL" chants, and the belief that momentum itself could push the cryptocurrency higher, Bloomberg reports.

Rocket emojis returned to X, bear market obituaries surfaced, and Michael Saylor posted an AI-generated meme about a nightclub, urging followers to "buy Bitcoin, hold for 10 years, ignore the noise, survive the fears."

The spark partly came from the bond market. Treasury Secretary Scott Bessent's plan to at least double the purchase of long-term Treasuries initially lowered yields and weakened the dollar, while gold soared.

This combination has revived the so-called depreciation bet: the idea that growing fiscal pressures and easing financial conditions strengthen the case for scarce assets outside the sovereign monetary system. For Bitcoin bulls, this provided fresh macroeconomic arguments, arriving just when bearish positions were overwhelmed.

Even Ray Dalio, hardly a crypto evangelist, spoke out in favor of Bitcoin, citing an "unsustainable" debt spiral.

"It's very encouraging to see signs of life in the crypto market. And this rally feels different from other shaky blips in recent months," said Noelle Acheson, author of the Crypto Is Macro Now newsletter.

The main hope of cryptocurrencies has always been that momentum breeds momentum.

This is precisely how the last boom was fueled. Rising prices forced short sellers to close their positions, attracting more money into spot ETFs, and boosting crypto-related stocks and companies with digital assets on their balance sheets, giving some more opportunities to raise funds and buy even more Bitcoin. Higher prices then brought back investors who had been waiting, adding a new layer of demand.

Last week saw the first sign of this mechanism restarting. The record wave of bearish bets was erased, spot trading volumes jumped, and Bitcoin ETFs attracted fresh inflows. The political backdrop also helped: President Donald Trump renewed his call for Congress to pass the Clarity Act, reinforcing the administration's generally supportive stance on digital assets throughout the cycle.

"The regulatory risk premium is being re-evaluated downward after Trump renewed his call for Congress to pass legislation on crypto market structure, which is important because clearer rules make it easier for institutions to assess risks," said Lacey Zhang, an analyst at Bitget Wallet.

The rally has been so rapid that Bitcoin has broken through its 100- and 200-day moving averages—popular technical indicators—and its 14-day relative strength index has entered what traders consider overbought territory.

At Standard Chartered, Jeffrey Kendrick sees potential for a self-sustaining rally. He pointed to record short liquidation since 2021 and more than $1 billion in weekly inflows into spot Bitcoin ETFs, arguing that higher prices could attract new flows and eventually bring leveraged traders back into the market.

"For the first time this year, there's a risk that my year-end forecast ($100,000) is too low," he wrote in a note. "Once investors remember how quickly prices can accelerate upward and we pass the October 6 date (12 months after the all-time high), a rally toward the record ($126,000) before year-end may be possible."

But one strong week doesn't prove the flywheel is back in gear. The world's largest cryptocurrency has only recovered from levels last seen in May and remains roughly 43% below its October record, still far from establishing a new trading range.

Much of the initial surge was due to forced short-covering, many ETF investors remain unprofitable, and digital asset companies, which fueled earlier rallies, remain weakened. Bitcoin has already experienced rebounds this year that fizzled out when they weren't followed by new buyers.

Establishing a new trading range will require something that a squeeze alone can't provide: sustained demand.

"There are encouraging signs: as prices rose, we saw fresh buying entering the market, not just traders covering short positions," said Tanay Ved, senior analyst at Talos.